RCS Capital (RCAP) Stock: Weak On High Volume Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified RCS Capital ( RCAP) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified RCS Capital as such a stock due to the following factors:

  • RCAP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.3 million.
  • RCAP has traded 230,334 shares today.
  • RCAP is trading at 9.96 times the normal volume for the stock at this time of day.
  • RCAP is trading at a new low 10.35% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on RCAP:

RCS Capital Corporation engages in the independent retail advice, wholesale distribution, investment banking, capital markets, investment management, and investment research businesses. Currently there is 1 analyst that rates RCS Capital a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for RCS Capital has been 750,300 shares per day over the past 30 days. RCS has a market cap of $463.0 million and is part of the financial sector and financial services industry. The stock has a beta of 0.14 and a short float of 31.4% with 15.21 days to cover. Shares are down 65.3% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates RCS Capital as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Capital Markets industry. The net income has significantly decreased by 530.9% when compared to the same quarter one year ago, falling from $3.29 million to -$14.16 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Capital Markets industry and the overall market, RCS CAPITAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for RCS CAPITAL CORP is currently extremely low, coming in at 5.22%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.26% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$14.10 million or 121.49% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 71.25%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 527.27% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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